by
Alex Nixon | Kalamazoo Gazette

Wednesday February 11, 2009, 6:15 PM

KALAMAZOO -- Bankrupt auto supplier Checker Motors Corp. is seeking to cancel its contract with its union workers and eliminate benefits for its union retirees.

The move would affect 125 union workers and 176 union retirees, the Kalamazoo-based manufacturer of metal stampings and welded assemblies said Friday in a motion with the U.S. Bankruptcy Court for Western Michigan.

Checker, which filed for Chapter 11 bankruptcy protection on Jan. 16, asked the court to reject its collective bargaining agreement with the United Steelworkers Union Local 2-682 and terminate "any retiree benefits for its existing retired union employees and active employees represented by the union."

For more than a year, the company said in its filing, it unsuccessfully attempted to negotiate concessions with the union to lower costs and stave off bankruptcy.

Checker details in the Friday filing its annual losses between 2001 and 2008 -- which total $24.9 million -- and the reductions in its cash reserves -- which dropped from $20.1 million in 2001 to $4 million in 2008.

Attempts to reach the union for comment Wednesday were not successful.

Checker "is not able to compete in the automotive supplier marketplace as a consequence of its uncompetitive labor rates and other employee and retirement benefits and obligations," the company said. "In addition to its exceedingly high labor costs, the debtor (Checker) has had to contend with continuing decline in market share of OEM (original equipment manufacturers) customers."

Checker said that without cutting $8.8 million from its annual costs, the company would likely be forced to cease operations and liquidate its assets by July. It said it was burning through $550,000 in cash a month.

And, as weakness in the U.S. auto industry continues, Checker said it expects sales this year to decline by 44 percent to $34.5 million, compared to 2008 sales of $61.1 million.

By eliminating management positions, cutting salaries of non-union workers and other changes, Checker said it had already cut $3.4 million from its yearly costs.
The company would attain the remainder of the $8.8 million cost reduction through lower wages, changes to benefits and the elimination of benefits for current and future union retirees, it said.

In Friday's filing, the company said it had 169 employees, including salaried and hourly workers. In its Jan. 16 bankruptcy filing, Checker said it had a total of 246 workers. The later filing does not rectify the discrepancy in the employee numbers, although a company spokeswoman said on Dec. 18 that Checker had laid off 90 workers up to that point of the year, and was trying to decide if it would lay off others after its holiday-season shutdown.

A message left for a company spokeswoman was not returned.

Checker's union contract is set to expire June 14, 2011, the company said, and includes increases in wages and pension contributions in June of 2009 and 2010.

Kevin McCarthy, a Portage attorney representing Checker, said he did not know when the bankruptcy judge might rule on Checker's filing. The union still has the opportunity to argue that the contract should not be scuttled, McCarthy said.